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Saturday, October 26, 2013

26/10/2013: Confidozac Failing to Cure Euro Area's Policy Risks

While the euro leaders are happily slipping into dream-like state of amnesia, engaging in esoteric discussions and debates about the US spying scandals, wasting summit time on chatter and fluffing of feathers, the region's trials are not going away.

Debt overhangs remain persistent in the public, non-financial corporate and households domains; incomes remain stagnant and declining in real terms; unemployment is sky-high; deficits are sky-high; lending is stuck in 'reverse' gear; depositors are getting taken for a ride by the banking system malfunctions; and so on... Aggregate levels of uncertainty/risk in the system are not abating back to the levels of pre-crisis bliss, no matter how much intensive Positiviagra, Hopium and Confidozac have been pumped into the airways...

Higher numbers above imply higher uncertainty. September is showing reversion to trend, up... Good news is that we are on downward trend. Bad news is that we've been in these 'false bottoms' before (Q3 2009 and Q4 2010-Q1 2011). Worse news is that the we are nowhere near the levels of uncertainty that we've reached at the peak of 2000s recession and dot.com bust, let alone the levels of 'normalcy'.

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This blog represents my personal views and is not reflective of the views or opinions held by any company, contractor, client or employer I work for currently or have worked for in the past. These views are not an endorsement to take any action in the markets or of any political position, figures or parties.

“It is not true that people stop pursuing dreams because they grow old, they grow old because they stop pursuing dreams.” Gabriel Garcí­a Márquez

Nassim Nicholas Taleb was asked whether public protests in Athens is a Black Swan Event. He replied: “No. The real Black Swan Event is that people are not rioting against the banks in London and New York.”

"Getting worse more slowly is not the same as getting better", Prof. Brad DeLong